April 6, 2018Newsletter

This Week at the Board - April 6, 2018

District Court Finds That Defendants Are Estopped From Relying On Prior Art That Could Have Reasonably Been Raised In IPR Petition

In ZitoVault, LLC v. International Business Machines Corporation and Softlayer Technologies, Inc., the plaintiff ZitoVault sued International Business Machines Corporation and Softlayer Technologies in the Northern District of California for infringing U.S. Patent No. 6,484,257.  After the case was filed, the patent was subject to an IPR proceeding by a third party.  In response to the petition, the Board instituted IPR.  The defendants then filed a substantially identical petition and requested joinder, which the PTAB granted.  In a final written decision, the Board decided not to invalidate any claims.  At the District Court level the plaintiff argued that the defendants were statutorily estopped from arguing that the instituted claims of the patent were invalid as being anticipated or obvious in light of prior art patents and publications discussed in their District Court invalidity contentions.  The District Court agreed, noting that when requesting joinder, the defendants did not raise any of the additional prior art patents and publications already identified in their invalidity contentions in the District Court case.  Under 35 U.S.C. §315(e)(2), a defendant may not assert invalidity grounds that reasonably could have been raised during the IPR.  In this instance, the defendants argued that the PTAB routinely rejects joinder if the second petition introduces new arguments or grounds.  Thus, the defendants did not raise the additional prior art in their IPR petition because they wanted to ensure that joinder would be granted.  The defendants argued that the only grounds they “reasonably could have raised” were the same grounds raised by the third party.  The District Court disagreed, noting that the PTAB has held requests for joinder can involve different grounds, and that joinder is discretionary.  The defendants therefore should have, and could have, reasonably included the additional grounds when requesting joinder. 

A link to the decision is found here.


District Court Orders Preliminarily Injunction Preventing Licensee From Pursuing PTAB Petitions

In Dodocase VR, Inc. v. MerchSource, LLC, Dodocase was able to obtain a preliminary injunction against MerchSource by establishing a likelihood of success for its breach of contract claim.  Dodocase and MerchSource entered into a license agreement for Dodocase’s patents that included a no-challenge clause and a forum selection clause for courts in San Francisco County or Orange County, California.  MerchSource later wanted to renegotiate the license because it felt that Dodocase was not sufficiently enforcing its IP and that one of the licensed patents was invalid.  Unable to reach an agreement, MerchSource filed three petitions with the PTAB seeking to invalidate three Dodocase patents.  The District Court for the Northern District of California found that the arguments offered by MerchSource did not overcome the policy favoring enforcement of the agreed-upon selection of forum, and that they would not permit a “belated attempt at forum shopping.”  The District Court stated that Congress preserved the ability to bring parallel proceedings, “recognizing that both [the PTAB and the Courts] are adequate fora to adjudicate claims of patent invalidity.”  The District Court further found that the fact that procedural rules at the PTAB were more advantageous to MerchSource was not a sufficient reason to disregard the choice of forum clause, especially where MerchSource was aware of the availability of  PTAB proceedings when it entered the agreement.  The Court ordered MerchSource to facilitate the withdrawal of the PTAB petitions.

A link to the decision is found here.

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